Watch for Performance Warning Signs
Even if your practice is running smoothly and doing well financially, you
shouldn’t take your eye off the ball. You may have a problem to solve if you
see one or more of the following warning signs of deteriorating practice
business performance.
Sudden Shifts in Receivables
The financial reports your accounting system generates can tell you loud and
clear when the business side of your medical practice needs more attention.
Be alert to sudden, unanticipated changes in total monthly charges,
receipts and adjustments. For example, if your 90-day receivables increase
significantly, you may have a problem with your claims to a major payer. A
big increase in adjustments compared to prior periods could mean unnecessary
write-offs are occurring. And, if collections drop below your normal
numbers, you need to obtain a prompt explanation from your
billing/collections staff.
Rising Overtime or Overhead
Absent a special situation, such as a staff member’s medical leave, the
overtime needs of a properly staffed medical practice usually shouldn’t vary
widely. If you find that your overtime expense has risen sharply, the
problem may be in your procedures or staffing levels. For example,
short-term absences may have become more frequent, perhaps even abused. Or
someone may be recording more time than worked or working unauthorized
hours. Find out the reason for your increased overtime and consider how to
control it better.
The explanation for an unanticipated increase in overhead may be as simple
as an unusual hot or cold spell that pushed up the cost of utilities. It
could be that
spending for supplies and travel may be getting out of control. Again, you
need to determine the cause of any large increase and remedy it, if
possible.
Late Charges
When bills are paid late, it may be a sign of a temporary or persistent cash
flow problem. It could be that it is taking too long to process
vendor payments. Either way, well-controlled payables are essential to a
well-run office. Learn why payments are being delayed and, if necessary,
make procedural or other changes to ensure that your practice’s obligations
are consistently settled before costly penalties are applied.
Too Many No-Shows or Overbooked Days
Patient scheduling cannot be entirely smooth, but you shouldn’t experience a
large number of patients who fail to show up for their appointments. Nor
should there be many days when, without reason, your practice’s appointment
schedule runs seriously behind, creating overtime expenses and patient
dissatisfaction.
If a pattern of scheduling difficulties becomes apparent, you’ll want to
reexamine your procedures and time blocking. Multiple days that run late
when all providers are present may indicate the need to add another
physician or a nonphysician provider. When no-shows are a problem, consider
having your staff make reminder calls or charging for missed appointments.
Call on Us
Our professionals can help you monitor your practice’s business performance
efficiently and develop practical solutions to any problems that become
apparent.
Monitoring Patient Services
Tracking trends in service categories and the associated coding can help you
maintain or increase revenues. For example, look at:
-
New patient and established patient visits - Are the levels of care accurate or is there avoidable undercoding?
-
Office consultations - Are any generally higher paying consultations being misclassified as lower paying new- patient visits?
-
Preventive services (physical exams) - Are you inviting payer rejections or downcoding by claiming a diagnostic problem that doesn’t justify the examination time?
Health Care Commentaries is
provided by Somerset’s
Health Care Team
for our clients and other interested persons upon request. Since
technical information is presented in generalized fashion, no final
conclusion on these topics should be made without further review. For
additional information on the issues discussed, please contact a member
of our Health Care Team. This
document is not intended or written to be used, and cannot be used, for
the purpose of avoiding tax penalties that may be imposed on the
taxpayer.
Somerset CPAs,
P.C.
3925 River Crossing Parkway, Third Floor
Indianapolis, Indiana 46240
317.472.2200 • 800.469.7206 • FAX 317.208.1200
www.somersetcpas.com
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